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In-Depth Information
it's very seductive, when you're backing these brilliant technologists with a
platform vision, to spread yourself too thin and “boil the ocean.”
Building a generalized platform from the start is often not successful because
you aren't solving a known pain point for a specific set of customers who have
said they'll pay for it. So I guess the biggest lesson is to have a very clear set
of customers that you're going to serve, notwithstanding the fact you may be
building something that can ultimately help many different types of customers.
That laser focus early on is very important to demonstrate the power of the
technology and to prove product/market fit.
Gutierrez:
When you're looking at teams of brilliant technologists, do you
expect them to have a fully formed idea, or is it more about working with and
learning about them during the preinvestment relationship?
Ehrenberg:
It's almost always the latter. It's a special thing that happens. We're
a fairly young firm, and we are building our reputation and our experience
based on a network of relationships with founders. We're not somebody like
Sequoia Capital, which has been around for and excelled across generations,
where startup founders are on their second, third, fourth, or fifth companies.
For us, we're in large part backing first-time founders, so not only do they not
have all the answers, they often lack business-building experience.
What we're looking for are great people who have a compelling vision, a
demonstrated ability to write and ship code, and with whom we're excited to
work for the next 8-10 years. Given the kind of high degree of engagement
that we have with our companies, it's essential that the chemistry be right.
We're spending a tremendous amount of our time with these younger, less-
experienced teams on helping them focus, grow as founders and as builders,
and execute against their vision.
Gutierrez:
What does the early engagement with companies look like?
Ehrenberg:
We work very early on with our companies to identify what the
KPIs are and should be as they execute against their plan. KPIs aren't always
knowable Day One. There are certainly generalizable KPIs that everybody
needs to track but, depending upon the business, there may be other elements
of data that you want to be collecting whose importance doesn't become
manifest until customers start interacting with the product. So we work with
the companies to try and build in a measurement culture. We have a bias
toward founders that intuitively embrace data collection and analysis. We
work with these teams to identify the right data to track given their par-
ticular business and how this data can be used to improve the product and/
or marketing strategies.
